The flaring of associated gas from the country’s producing oil fields, particularly in the southern Province of Basra, costs $5 million a day, according to Dhia al-Mawsawi, the Director-General of Southern Oil Company.

Iraq’s three largest producing-fields lie in Basra, where most of the country’s oil output and exports originate.

But the country still lacks the technology to process its associated gas and turn it into fuel despite a surge in domestic needs, particularly for cooking fuel.

Iraq currently imports large volumes of natural gas from Iran.

However, Mawsawi said there should be no flaring of gas in Basra by the end of 2013.

He said his company was in talks with oil giant Royal Dutch Shell for an agreement to build the facilities to process the country’s associated gas and turn it into domestic fuel.

He did not say whether any contract had been signed but added that the oil major would start working under current agreements in which the giant firm has already signed several deals with the country.

Iraq only process 400 million cubic meters of its total output of associated gas estimated at more than 1100 cubic meters.